KONGSBERG DEFENCE SYSTEMS · to publicly update, correct or revise any of the information included in this presentation, including forward-looking information and statements, whether

KONGSBERG DEFENCE

SYSTEMS

Harald Aarø, Executive Vice President

Business Development

© 2015 KONGSBERG – All rights reserved.

DISCLAIMER

This presentation contains certain forward-looking information and statements. Such forward-looking information and statements are based on the current, estimates and projections of the Company or assumptions based on information currently available to theCompany. Such forward-looking information and statements reflect current views with respect to future events and are subject to risks, uncertainties and assumptions. The Company cannot give assurance to the correctness of such information and statements. Theseforward-looking information and statements can generally be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use terminology such as "targets", "believes", "expects", "aims", "assumes", "intends", "plans", "seeks", "will", "may", "anticipates", "would", "could", "continues", "estimate", "milestone" or other words of similar meaning and similar expressions or the negatives thereof.

By their nature, forward-looking information and statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements that may be expressed or implied by the forward-looking information and statements in this presentation. Should one or more of these risks or uncertainties materialize, or should any underlying assumptions prove to be incorrect, the Company's actual financial condition or results of operations could differ materially from that or those described herein as anticipated, believed, estimated or expected.

Any forward-looking information or statements in this presentation speak only as at the date of this presentation. Except as required by the Oslo Stock Exchange rules or applicable law, the Company does not intend, and expressly disclaims any obligation or undertaking, to publicly update, correct or revise any of the information included in this presentation, including forward-looking information and statements, whether to reflect changes in the Company's expectations with regard thereto or as a result of new information, future events, changes in conditions or circumstances or otherwise on which any statement in this presentation is based.

Given the aforementioned uncertainties, prospective investors are cautioned not to place undue reliance on any of these forward-looking statements.


AGENDA

THIS IS KONGSBERG DEFENCE SYSTEMS

DEVELOPMENT SINCE CMD 2014

CORE TECHNOLOGY & INNOVATION

REMOTE TOWER – A HEAD START IN AN EMERGING MARKET

THE DEFENCE MARKET

OPPORTUNITIES AHEAD


KONGSBERG

DEFENCE SYSTEMS

Command and control,

surveillance, tactical

communication, missiles,

space and

aerostructures

29 offices

in 17 countries

1 718 employees

Revenues LTM 4,2 BNOK

Order backlog 9,2 BNOK

International success

in selected niches

A modern portfolio positioned

for further growth

© 2015 KONGSBERG – All rights reserved. Photo: Darin Russell / Lockheed Martin


OUR GLOBAL BUSINESS SYSTEMLocal offices in 17 countries ensures access to all important markets and proximity to customers

Norway38%

International62%

REVENUE DISTRIBUTION 2014

Norway93%

International7%

EMPLOYEE DISTRIBUTION 2014


OUR GLOBAL BUSINESS SYSTEM- complemented with key partners in 14 countries


KONGSBERG

DEFENCE

SYSTEMS

INTEGRATED DEFENCE SYSTEMSCORE BUSINESS• NASAMS and Air defence solutions

• NATO programs including AGS and AWACS

• Artillery fire control and Army Vehicle digitalization

TYPICAL APPLICATIONS• Air Defence: Defending strategic areas such as air bases, cities for homeland

defence, vital assets

MAIN CUSTOMERS• Norway, Finland, Spain, Netherlands, US, Raytheon

• NATO

SUCCESSFUL AIR-DEFENCE PARTNERSHIP WITH RAYTHEON• NASAMS is the most sold air-defence system in its class

• Teaming Agreement renewed with 10 years (to 2025)

• Export of NASAMS solutions exceeds 12 BNOK

DEFENCE COMMUNICATIONSCORE BUSINESS• Tactical Communications Systems

• Broad range of products for most tactical applications

• Government grade crypto and cyber defence

TYPICAL APPLICATIONS• Army C2, Air Defence communications subsystem

• Soldier and vehicular combat networks

MAIN CUSTOMERS• Norway and Hungary

• Air Defence integrators Raytheon and KDA

• Selected MENA countries

NEW AND MODERN PRODUCT RANGE• Designed to operate in advanced hostile environment

10%


Pie

charts

show

revenue

dis

tributio

nat 1

5Q

3.

31%


KONGSBERG

DEFENCE

SYSTEMS


8%

SPACE & SURVEILLANCECORE BUSINESS• Booster attachment & release mechanisms

• Mechanisms and electronics for satellites

• Turn-key ground stations for satellites

• Satellite operations and data download-services

• Systems for maritime surveillance

TYPICAL APPLICATIONS• Ariane5 heavy lift launcher

• Control of solar panels on satellites

• Earth observation and scientific space missions

• Frequency conversion and telemetry, tracking & command (TT&C) equipment

on commercial satellites

• Downloading of satellite date, satellite control services

MAIN CUSTOMERS• Digital Globe, SS Loral, NASA/NOAA, ESA, Airbus,

• National Coastal Authorities

NAVAL SYSTEMSCORE BUSINESS• MSI-90U Mk2 Combat Management System

• Navigation and Integrated Bridge Systems

• Active and Passive Sonar Systems

• PROTEUS Naval Trainers

TYPICAL APPLICATIONS• Submarines

• Surface Ships

• Force Protection

• Simulation and Training

MAIN CUSTOMERS• Norway, Italy, Germany, Australia, Indonesia, the Netherlands

15%

Pie

charts

show

revenue

dis

tributio

nat 1

5Q

3.


KONGSBERG

DEFENCE

SYSTEMS


15%

AEROSTRUCTURESCORE BUSINESS• Composites and metallic structures

• Repair and overhaul

TYPICAL APPLICATIONS• Aircraft, F-35

• Helicopters

• Missiles

MAIN CUSTOMERS• Lockheed Martin

• Northrop Grumman

• Marvin Engineering

• Agusta Westland

• Airbus Helicopters

• Norwegian Defence Logistics Organisation (NDLO)

MISSILE SYSTEMSCORE BUSINESS• NSM, JSM and Penguin

• NSM and JSM are the world’s only 5th generation anti-ship missiles

• Electro-optical products (Laser Range Finder, Cameras, Remote Visual Tower)

TYPICAL APPLICATIONS• Ship, truck and air launched stand-off missiles for sea and land targets

MAIN CUSTOMERS• Norwegian, Polish and Malysian Navy (NSM)

• Norwegian Air Force, Agreement with Australian Air Force (JSM)

• NATO and allied navies (Penguin)

• Avinor (Remote Tower)

21%

Pie

charts

show

revenue

dis

tributio

nat 1

5Q

3.


351

478 520 530

574

2011 2012 2013 2014 2015*

STEADY REVENUES – IMPROVED MARGINS

REVENUES EBITDA

9,0% 10,3% 11,4% 12,4% 13,5%

3 720

4 446 4 313 4 276 4 247

2011 2012 2013 2014 2015*

• International sales

• Financed development programs

• Strong global partnerships

• Continuous improvementKEY REVENUE AND EBITDA DRIVERS

Revenues 2011-2013 adjusted for KSAT

* Last 12 months


STRONG ORDER BACKLOG – GOOD VISIBILITY

7 953

6 817

5 489

9 471 9 163

2011 2012 2013 2014 15Q3

BACKLOG

IDS

Mis

sile

s

Sp

ace

& S

urv

.

Ae

rostr

uctu

res

Def.

Com

m.

Nava

l

0%

5%

10%

15%

20%

25%

30%

IDS

Mis

sile

s

Sp

ace

& S

urv

.

Ae

rostr

uctu

res

Def.

Com

m.

Nava

l

IDS

Mis

sile

s

Sp

ace

& S

urv

.

Ae

rostr

uctu

res

Def.

Com

m.

Nava

l

201513%

201634%

2017+53%

9 1

63

BREAKDOWN BY DELIVERY DATES

Life-cycle business and framework agreements not converted

into delivery contracts are not included in the backlog.


INTERNATIONAL SUCCESS IN SELECTED MARKETS- built on broad position in the home market

Competitive position within international defence

business differs with level of industrial partnership

The Norwegian industrial partnership position has been the

cradle to new products and international market access

SUPPLIER WINNING

POSITION

VALUE PROPOSITION

Price / product

performance

Trusted industrial

partnerships

GOVERNMENTAL

CONSIDERATION

MAJOR DEFENCE INVESTMENT

National security | National industry |

National finances

BUY DOMESTIC:

National req.

Control capabilities

Build industry

Jobs

BUY ABROAD - MOTS:

Alliances

Best product

Best price

NICHE INTERNATIONAL MARKETS

BROAD HOME MARKET


AGENDA





THE DEFENCE MARKET

OPPORTUNITIES AHEAD


RAYTHEON TEAMING AGREEMENTS

1984 1989 1999 2000 2001 2002 2002

2003 2004 2006 2007 2009 2012 2014

NASAMS exports

>12 BNOK


NEW CONTRACTS IN

DEFENCE COMMUNICATION


Satellite coverage of Norwegian territory

Significant industrial potential

COPERNICUS /

SENTINEL



MSI-90U MK2 ON

BOARD ITALIAN

U212A SUBMARINES



FIRST RUDDER FROM

KONGSBERG

AM-1: FIRST

NORWEGIAN F-35

ROLL OUT

22 SEPTEMBER

2015

FIRST FUSELAGE FROM NGC

FIRST FLIGHT


SIGNIFICANT F-35 ORDERS IN 2015


DELTAONE DIE-FORGING INITIATIVE

Same output

TITANIUM

SPAR ~60%

OF TOTAL

RUDDER

COST

Lockheed Martin subcontractor KONGSBERG is changing the way it manufactures the jet’s rudder

component. The company discovered it would waste less material by using a variety of techniques

such as forging and machining.

Lorrain Martin, LM to National Defense Magazine 16 September 2014“

TITANIUM RAW MATERIAL (KG):

Die-forge147

Water-cut488


F-35 RAMP-UP

LRIP 3-10 ORDERS:

2,2 BNOK

LIFETIME POTENTIAL F-35:

~ 16 BNOK


© 2015 KONGSBERG – All rights reserved.© 2015 KONGSBERG – All rights reserved.

1,3 BNOK

CONTRACT IN

POLAND


AUSTRALIA SIGNS

COOPERATION

ON JSM



MALAYSIA

SELECTS NSM

FOR GOWIND

SHIPS



SUCCESSFUL

TEST OF JSM

FROM F-16



AGENDA





THE DEFENCE MARKET

OPPORTUNITIES AHEAD


NASAMS CORE TECHNOLOGY – MORE THAN

AIR DEFENCE

NETWORK C2 NODE


KONGSBERG – DEFENCE COMMUNICATIONS

K-TaCS

In use in more than 30 countries

K-TaCS

Ruggedized by Design

K-TaCS

Networking Air Defence

and C4ISR


2ND GENERATION COMMAND RECEIVER - Satellite Fleet Management

• Use of satellites in multiple orbital positions

• Frequency Coordination to avoid interference possibility to change receive frequency in space


PASSIVE RF SEEKER FOR JSM


SUBMARINE COMBAT NAVIGATION SYSTEM

Increased submerged

time, reducing

detection risk


AGENDA





THE DEFENCE MARKET

OPPORTUNITIES AHEAD


AVINOR SELECTS

KONGSBERG FOR

REMOTE TOWER


NEW TECHNOLOGY ENABLES SAFE

REMOTE OPERATIONS


REMOTE TOWER PRINCIPLE

MULTIPLE REMOTE

TOWER OPERATION

AIRPORT 1 AIRPORT 2 AIRPORT 3

CONTROL CENTER


UNIQUE MODULAR ELECTRO OPTICAL

SENSORS SUITE

VS. HD-KAMERA

VIEW

360 Camera System

(rotating):

• Day and IR view camera

• Eye resolution

• Low bandwidth

Pan Tilt Zop, Platform:

- Day view, zoom camera

- IR view camera

- Laser Range Finder

- Signal Light Gun


TECHNOLOGY INSERTION

INFRARED, ELECTRO-OPTICAL

OPERATOR DECISION CENTERS,

REAL TIME NETWORK, SAFETY

CAMERA, LASER RANGE, SERVO

ATM SYSTEMS, NOVA

WORLD CLASS

REMOTE TOWER

• safe operations

• cost-effective


TRADITIONAL

SOLUTIONS



THE VIRTUAL

TOWER

Retina Quality Rendering



AGENDA





THE DEFENCE MARKET

OPPORTUNITIES AHEAD


INCREASING GLOBAL FOCUS ON DEFENSE

GLOBAL DRIVERS IMPACT ON GLOBAL DEFENSE MARKET

SECURITY ISSUES

IN MENA REGION

MORE FOCUS ON FULL-SCALE CONFLICT POTENTIAL

• Need for full-scale capabilities

• More A2/AD, “Air-Sea Battle” challenges

• More C4ISR, space, cyber warfare

• Less light army operations

MAINTAIN COUNTER-INSURGENCY CAPABILITIES

• “Boots-on-the-ground”

• Minimum acceptance for loss of lives

• Utilize stand-off capabilities


MODEST GROWTH IN THE GLOBAL DEFENCE

MARKET

EUR/USA

RoW

2019

57%

43%

2018

430

58%

42%

2017

421

60%

40%

2016

411

61%

39%

2015

392

61%

39%

2014

381

61%

39%

2013

378

62%

38%

441

388

68%

32%

2011

413

72%

28%

2012

420

74%

26%

+8%

-25%

+3,0%-2,4%

2010

Source: Jane’s Defence Budgets, 13 Oct 2015. Procurement and RDT&E in constant 2014 USD billion.


AGENDA





THE DEFENCE MARKET

OPPORTUNITIES AHEAD


KDS EXPECTS CONTINUED GROWTH BASED

ON OUR STRONG VALUE AND PERFORMANCE

CULTURE

Modern well positioned product portfolio

– a solid base for business opportunities

Solid backlog of orders

DeltaOne improves competitiveness

Strategic partnerships

We expect growth going forward



OPPORTUNITIES AHEAD

F-35 DELIVERIES AT FULL RATE

POTENTIAL FOR NEW NASAMS CONTRACTS

JSM OPERATIONAL ON F-35

NEW NORWEGIAN SUBMARINES

2020 2025

INTERNATIONAL SALE OF NSM

Documents

KONGSBERG DEFENCE SYSTEMS · to publicly update, correct or revise any of the information included in this presentation, including forward-looking information and statements, whether